Stock Market Update: After the announcement of RBI’s Monetary Policy Committee, the Indian stock market is witnessing a great boom. The market was trading in a limited range during the policy announcement. But after the announcement of increasing the repo rate by 50 percent and after that the announcement of giving a gift to the real estate sector, there is a boom in the market. At present, the index of Mumbai Stock Exchange is trading at 55,314 with a gain of 207 points and Nifty is up by 65 points at 16,481 points.
Markets happy for not increasing CRR
RBI has heard the appeal of the banks. And the Monetary Policy Committee has decided not to increase the CRR i.e. Wish Reserve Ratio. On May 4, the RBI increased the CRR by 0.50 percent to 4.50 percent. Due to which Rs 90,000 crore got out of the banking system and went to RBI.
The banks had appealed to the RBI saying that the credit demand is increasing in the country, to meet which the banks need additional cash. If RBI increases the CRR again, then there will be a shortage of cash with the banks. Therefore, the CRR should not be increased, which has been accepted by RBI. Banks have deposited Rs 8.17 lakh crore as CRR with RBI. At present, banks have additional cash of Rs 3.50 lakh.
Cash Reserve Ratio is that portion of deposits with banks that banks have to keep with the RBI. And the banks which keep the amount with RBI in the form of CRR, they do not even get interest on it. However, banks have to pay interest to their customers on those deposits.
Growth in real estate sector
The real estate sector is booming due to the decisions taken by the RBI to provide more credit to the real estate sector and give a boost to the sector. Many real estate stocks are rallying after the RBI’s announcement to allow more home loans by cooperative banks and more loans by rural cooperative banks to commercial real projects. DLF is trading at 3.22 percent, Shobha Developers 2.97 percent, Oberoi Realty 2.35 percent, Godrej Property 2.10 percent, Biged Enterprises 1.96 percent.
boom in banking sector
Banking sector stocks also rose. The shares of Bank of Baroda, SBI, HDFC Bank, IDFC First Bank, Federal Bank, Kotak Mahindra Bank, Bandhan Bank, PNB and ICICI Bank are witnessing great gains.